BigStockPhoto.comThe world changed dramatically on July 2, 2016, the day the very first baby boomer reached age 70 ½. Because at that moment, the first baby boomer was required by law to begin taking required minimum distributions (RMDs) from his or her retirement plans, such as the Traditional IRA and 401(k). The Trouble with RMDsTax-deferred retirement accounts, like the Traditional IRA and 401(k), allow for tax-deductible contributions over the years. These contributions accumulate tax-deferred and grow as savers invest them in the stock market, again, without any current taxation. The IRS won’t let this tax-deferral continue forever, so at age 70 ½, tax-deferred retirement account participants are required to begin taking distributions and paying taxes on those withdrawals.

Source: Forbes February 06, 2018 15:22 UTC